China’s retail landscape is undergoing a rapid transformation as fierce competition among instant commerce providers reshapes how people shop. Since April, companies including Alibaba, Meituan and JD.com have lured millions of consumers with heavy subsidies and lightning-fast deliveries, often bringing goods to doorsteps within half an hour.
Instant commerce combines online shopping with rapid delivery, turning everyday purchases into near-instant transactions. A typical lunchbox order now costs as little as US$1 or US$2, including delivery. Meituan’s “Grouping for Good Meals” promotion, for instance, offered a four-dish set with rice and a drink for 6.9 yuan (US$0.97), arriving in 27 minutes. Delays of more than 15 minutes earned customers 4 yuan in compensation.
Consumers have eagerly embraced such offers. Bo Wen, a 30-year-old office worker in Guangzhou, recalled buying a cup of coffee for just 0.01 yuan on Alibaba’s Taobao Shangou platform. These low-cost deals highlight how aggressive subsidies have been at the heart of the battle for market share.
This week, all three platforms began taking pre-orders for Apple’s iPhone 17, promising deliveries in as little as 30 minutes once official sales start. The move shows how instant commerce has expanded well beyond food, extending its reach into electronics, travel services and more.
Fierce investment in kitchens and ecosystems
The competition is not limited to front-end discounts. Platforms are investing heavily in infrastructure to gain an edge. Meituan has pledged to build 1,200 so-called Raccoon Restaurants over three years. These central kitchens, designed for takeaway-only operations, are intended to reduce costs and improve efficiency for restaurant partners.
JD.com, which entered food delivery earlier this year, plans to invest 1 billion yuan to recruit cuisine partners and roll out 10,000 self-operated 7Fresh kitchens. The company described these facilities as “the largest supply chain innovation over the 15-year course of the local food delivery industry”.
Alibaba has taken a different approach by integrating its platforms. In June, its food delivery service Ele.me and travel agency Fliggy were folded into its e-commerce business. More recently, it launched an AI-powered ranking feature on Amap, recommending restaurants, hotels and tourist attractions in over 300 cities. These initiatives aim to leverage Alibaba’s wider ecosystem and encourage cross-selling.
Jay Lau, an analyst at S&P Global Ratings, noted that “cross-selling is the main goal”. He suggested Meituan was in a more defensive position, while Alibaba and JD.com could benefit more from their larger retail ecosystems.
A high-stakes battle for the future of retail
The price war has cost the companies hundreds of millions of yuan daily, while the number of transactions has soared into the hundreds of millions. Alibaba reported a record 120 million daily orders in August, though still behind Meituan’s 150 million peak in July. JD.com, meanwhile, recorded a 40 per cent annual increase in quarterly active customers.
Despite this growth, regulators have stepped in. In late July, China’s State Administration for Market Regulation called on the three firms to rein in aggressive promotions and ensure fair competition. Since then, the platforms have scaled back on extreme discounts, though rivalry remains intense.
The financial stakes are enormous. Analysts estimate that the three firms will spend at least 160 billion yuan over the next 18 months to capture or defend market share. Meituan remains the most vulnerable, as food delivery provides the bulk of its revenue. JD.com has seen food delivery losses erode profits, while Alibaba, with a more diversified portfolio, faces less risk.
Alibaba’s daily active users rose 20 per cent in early August, boosting its valuation alongside strong AI and cloud growth. However, as Tang Ya, founder of the XS Institute of China Economy, warned, its cloud business is also “a massive cash-guzzling beast”. Meituan’s advantage lies in logistics and operational efficiency, while Alibaba benefits from its e-commerce scale and AI-driven ecosystem.
Looking ahead, analysts expect Meituan to maintain dominance in food delivery, though its share of instant commerce could fall to 48 per cent by 2030, nearly equal to Alibaba’s projected 47 per cent. JD.com is expected to remain a strong challenger.
For consumers, the transformation has already changed daily life. Guangzhou resident Bo Wen summed it up when recalling the swift delivery of a replacement air-conditioning remote during a summer heatwave: “If I bought through a traditional e-commerce platform, it would be a few yuan cheaper. But on a sweltering day, I’d rather spend the extra money to get a replacement unit immediately.”
